The Housing Market Just Got Worse

SAN DIEGO  Several articles today mentioned the fact that the U.S. housing market has suffered a double-dip recession. After home prices rose a bit over the course of 2009 and 2010, a quarterly report from Clear Capital shows they have dropped below what we thought was the trough bottom of May, 2009.

Meanwhile, the fiscal detritus of the housing bust continues to litter the ground. The nation’s largest mortgage company, Fannie Mae, just asked the government for another $8.5 billion to cover bad loans it made prior to 2009.

The second dip of the housing market is a sad fact to me. I bought a new house last August and I almost certainly paid more for it than I should have. On the other hand, I also sold a house last year and I probably got more for it than I should have. In my case, it evens out.

In fact, there is more than one silver lining to the dark housing cloud. First-time homebuyers are well set, as homes have become very affordable. In fact, columnist Robert Samuelson writes that trends in housing costs will work to the long-term advantage of young people who are now entering the job market.

Good thing, he says, since these youngsters are faced with myriad other financial burdens, including paying the health care and pension costs of the baby-boom generation.

Tom, this is a look at the National housing market....dont you know we live in San Diego where the streets are paved with gold? lol

All kidding aside, its a bumpy road for certain. A few things have played on the numbers. Number of distressed sales, capable borrowers and 'move up' buyers. The latter may not be 'moving' at all these days though.Another thing is, when I was house hunting, I found the quality of homes for sale lacking. Tons of overpriced fixers and just overpriced inventory period. Its still a pretty ugly picture, but at least we are getting a better idea of how the dust is settling. This is going to be a while though. To anyone buying a home or looking. Stay diligent and know your market. Real Estate is as local as its ever been.

The quality of the homes for sale always drags down the mean market price. But the lesson (for me) of the past two years is that trying to game the market is always very dicey proposition. You can try to sell high and buy low. But buying a house as a place to live, rather than an investment, is always the best option... provided you're buying house you can actually afford.